Kingsway Grants Exemption from Tax Benefit Preservation Plan

TORONTO, Oct. 16, 2012 /PRNewswire/ - (TSX: KFS) (NYSE: KFS) Kingsway Financial
Services Inc. ("Kingsway" or the "Company") today announced that its Board of Directors (the "Board") has received and granted an exemption request under its tax benefit
preservation plan (the "Plan") to Oakmont Capital Inc., a company controlled by Gregory Hannon and
Terence Kavanagh, both of whom are members of the Board.

The Plan was implemented September 28, 2010 to protect the value of the
Company's net operating losses (the "NOLs") accumulated in the Company's United States subsidiaries. While the
Plan is designed to penalize the economic interests of any person or
group which acquires 5% or more of the Company's outstanding common
shares without approval of the Board, it also provides for a limited
grandfathering provision for existing 5% plus shareholders of the
Company.

Oakmont Capital Inc. owns approximately 6.2% of the common shares of
Kingsway and is eligible to submit exemption requests through the
grandfathering provision of the Plan. An exemption to purchase up to an
additional 2% of shares on the open market was received by the Company
on October 10, 2012. As approved by the Board, the exemption granted to
Oakmont is conditioned upon a two-week waiting period to allow other
investors interested in considering exemption requests to petition the
Board as well. Requests will be considered on a case-by-case basis and
an exemption is at the discretion of the Board.

The full Plan is available for review on the Company's website.

About the Company

Kingsway is a holding company functioning as a merchant bank with a
focus on long-term value-creation. The Company owns or controls stakes
in several insurance industry assets and utilizes its subsidiaries,
1347 Advisors LLC and 1347 Capital LLC, to pursue opportunities acting
as an advisor, an investor and a financier. The common shares of
Kingsway are listed on the Toronto Stock Exchange and the New York
Stock Exchange under the trading symbol "KFS."

Forward Looking Statements

This press release includes "forward looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934 that are not historical facts, and
involve risks and uncertainties that could cause actual results to
differ materially from those expected and projected. Words such as
"expects", "believes", "anticipates", "intends", "estimates", "seeks"
and variations and similar words and expressions are intended to
identify such forward-looking statements. Such forward looking
statements relate to future events or future performance, but reflect
Kingsway management's current beliefs, based on information currently
available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and
results discussed in the forward looking statements, including, without
limitation, our potential inability to complete current or future
acquisitions successfully, our inability to successfully implement our
restructuring activities, and our inability to adequately estimate and
provide for an appropriate level of reserving at our insurance company
subsidiaries. For information identifying important factors that could
cause actual results to differ materially from those anticipated in the
forward looking statements, see Kingsway's securities filings,
including its Annual Report on Form 10-K for the year ended December
31, 2011 ("2011 Annual Report") and its Quarterly Report on Form 10-Q
for the quarter ended June 30, 2012. Except as expressly required by
applicable securities law, the Company disclaims any intention or
obligation to update or revise any forward looking statements whether
as a result of new information, future events or otherwise.

Additional Information

Additional information about Kingsway, including a copy of its 2011
Annual Report and its Quarterly Report on Form 10-Q for the quarter
ended June 30, 2012, can be accessed on the Canadian Securities
Administrators' website at www.sedar.com, on the EDGAR section of the
U.S. Securities and Exchange Commission's website at www.sec.gov or through the Company's website at www.kingsway-financial.com.